Netflix Shares Fall on Weak Subscriber Growth: What Wall Street's Saying

Netflix Shares Fall on Weak Subscriber Growth: What Wall Street's Sayingā€¯

Dwelling on the subscriber guidance, the analyst said the company's domestic subscriber guidance of 0.6 million was ahead of his estimate of 0.21 million and the consensus estimate of 0.19 million.

Netflix has expanded around the world over the last few years, betting that its USA formula would pay off in other countries.

The firm's shares fell in after hours trading, dropping 3% with investors disappointed by the slower-than-expected growth.

Indeed, Netflix's flagship series, "House of Cards", delayed the premiere of season 5 from the first quarter to the second quarter. Analysts predict that Netflix will post $1.11 earnings per share for the current year.

In a letter to shareholders, Netflix said that in regards to its Q1 performance, though it missed relative to guidance, "There were no substantial variations from our January guidance forecast". Netflix made the speculation Monday with the announcement of its first-quarter profits.

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Netflix has no interest in getting into the live television streaming game, so is not facing off with services such as PlayStation Vue, DirecTV and YouTube TV, according to executives. In addition, the company added 1.42 million streaming subscribers domestically, and added 3.53 million in the rest of the world. The firm earned $2.64 billion during the quarter, compared to analyst estimates of $2.64 billion. "Our focus also is on on-demand, commercial free viewing rather than live, ad-supported programming".

Speaking during Netflix's Q1 2017 Earnings Conference Call, Hastings said the company was "super-excited" at the expectation of crossing 100 million, describing it as "a big accomplishment" but "really just the beginning". In the first quarter, Netflix net subscribers were standing around 1.42M in the USA, compared to the consensus estimate of 1.59M and 1.93M in Q4.

"Investors ask us about Amazon's move into NFL football". Netflix is now forecasting operating margin at 4.4% in Q2, placing it on track to reach its 7% target for the full year.

Netflix expects to add 2.6 million subscribers internationally next quarter - it launched in 130 additional countries previous year - and 600,000 subscribers in the US, both which exceed analyst estimates. The company plans to spend more on original content this year and reduce outlays on licensed material such as movies.

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